What is an insurance claim?
A claim is a formal request you make to your insurance company for money. You pay your premium every month so the company will help you pay for major repairs after an accident or disaster. The word itself comes from the Latin word clamare, which means to call out or demand. It became a standard legal term for demanding money owed under a contract.
When a tree falls on your garage or a pipe bursts and floods your kitchen, you file a claim. The insurance company reviews your policy to see if the damage is covered. If it is, they send you a check to cover the repair costs minus your deductible. Understanding how this process works is a big part of managing your Home Insurance properly.
When to file a claim
You should only file a claim when you face a large, unexpected expense that is covered by your policy. Good examples include fire damage, severe wind damage, or sudden water leaks. Standard wear and tear is never covered. If your old water heater simply stops working, you pay for the replacement yourself.
Before you file, you must check your deductible. This is the amount you pay out of pocket before the insurance kicks in. Deductibles usually range from $500 to $2,000. Let's say a hail storm wrecks your shingles. A total replacement usually costs $10,000 to $20,000 depending on your house size and location. If your deductible is $1,000, you pay that first $1,000. The insurance company pays the rest. If a repair only costs $1,200 and your deductible is $1,000, it makes no sense to file a claim for just $200.
How the process works
Filing a claim involves a few basic steps. You want to act quickly after a disaster to prevent further damage. Here is what you can expect to do.
- Document the damage. Take plenty of clear photos and videos of the ruined items or structural damage before you clean anything up.
- Prevent more damage. Put a tarp over a leaky roof or shut off the main water valve. Insurance companies expect you to stop the problem from getting worse. Keep receipts for any emergency materials you buy.
- Call your agent. Report the incident right away. They will tell you if the event is covered and open your case.
- Meet the adjuster. The company will send an inspector called an adjuster to your home. They look at the damage and write an estimate for the repair costs.
- Get estimates from pros. You should also get quotes from local contractors to compare against the adjuster's estimate.
- Receive your money. The insurance company sends you a check to start the repairs. Sometimes they make the check out to both you and your mortgage lender.
What to watch out for
Filing a claim goes on your record. A database called the Comprehensive Loss Underwriting Exchange tracks your history for up to seven years. If you file multiple claims in a short time, insurance companies view you as a high risk. This can cause your monthly rates to jump up. In extreme cases, the company might even cancel your policy.
Always read your policy details before an emergency happens. Many homeowners are surprised to learn that standard policies don't cover flood damage or earthquake damage. You usually need to buy separate policies for those specific disasters. If you live in an area prone to hurricanes or tornadoes, you might also have a separate, higher deductible just for wind damage. Knowing your coverage helps you handle Home Emergencies without panic.
